Wolff: Music icon enters the streaming business

Sep. 23, 2013
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Columnist Michael Wolff. / Todd Plitt, USA TODAY

by Michael Wolff, USA TODAY

by Michael Wolff, USA TODAY

Music makes the mobile device. This was one more notable Steve Jobs intuition: From iPod to iPhone, just keep the music coming.

The fact that a BlackBerry seems so atonal, that its emphasis is on typing instead of sound, is one of the things that has doomed it.

Likewise, portability of music as the main audience driver doomed the established music industry, and industry kingpins, too. Given music's long co-dependent relationship with radio, this should not have been so difficult to comprehend for the music business, but it was.

Now all of the dominant players in the new music industry are technology companies - Apple, Spotify, Google, Pandora, Rhapsody - with their value being the ease and the ubiquity with which they deliver nearly infinite musical choice.

But one of the last of the old-time music guys still on his feet is trying for a comeback. Jimmy Iovine, the 60-year-old music business legend and cohort of rap artists, a veteran of LPs, CDs and music stores, is trying to muscle into the streaming business.

His is a quintessential music industry play: Marketing is the name of the game, and there's no marketer like a music marketer.

This is in pretty stark opposition to the new music business ethos: Music - its delivery across every platform and at any time, along with the complex elements of parsing infinite choice - is a technology play.

On the one hand, there is Iovine, a dealmaker, a tastemaker, a friend to artists offering all manner of cool and celebrity endorsements; on the other hand, there is Spotify, delivering on hundreds of millions of requests a day and cracking the music genome.

Iovine is the co-founder of Interscope Records, whose credits include Dr. Dre, Eminem and Lady Gaga, among others, and he has recently had his own star turn as a "mentor" on American Idol.

What's more, he's a key player in the miraculous reinvention of the headphone business. With a set of frontmen and joint ventures and outsourcing partners, not unreminiscent of the music business at its most baroque, Iovine was in the mix of reconceiving the headphone under the brand Beats by Dr. Dre. Headphones became a fashion accessory, and in a short time Beats took 40% of the market.

Where most other music business kingpins have gently accepted retirement, Iovine keeps managing another day.

Iovine, using Beats as his branding and marketing vehicle, is trying to build a streaming company and competitor to Spotify - Beats Audio, which has taken a $60 million investment from Len Blavatnik, the Russian oil, mining and real estate mogul who owns Warner Music Group.

Spotify - which now has 8 million paid monthly subscribers and more than three times that many free users, adding 350,000 new users a day - began in Europe in 2008, more an engineering company than a music company. It built out its infrastructure market by market, putting together its complex arrangements with each of the major labels before launching in the U.S. Its accomplishment is not only the free/paid business model that Iovine hopes to emulate, but a platform that can actually serve its massive growth. It also has, arguably, the subtlest algorithm for decoding the musical genome - that is, being able to seamlessly match taste, style and mood of music. Spotify knows what you're looking for.

Iovine, practically speaking, has none of this going for him. The platform that he has been developing has missed a series of launch dates, with turnover of engineering talent and rumors of epic crashes. Nor does he yet have any actual deals with major labels in place.

Curiously, one of his key marketing propositions is what he's calling "curation," not the algorithmic process that has revolutionized the way people listen to music but a more old-fashioned music industry notion of cultural tastemaking. DJs and music writers and tastemakers will curate Beats Audio like ‚?¶ radio.

But on his side, he can capitalize on enormous anxiety in the marketplace, nowhere so great as among the mobile carriers who, like BlackBerry, find themselves without a distinct music strategy or identification. (Sprint's owner, Softbank, recently tried to buy Universal Music Group.)

In promoter fashion, Iovine, without a working product, has nevertheless created something of a roiled market among the major carriers, AT&T, Verizon and Sprint, for their non-iPhone products. Iovine, playing one off against the other and offering celebrity dog-and-pony shows - and, if you'd like, a glam evening on the town - is seeking to jump-start his business in old-media fashion with a bundling deal. In such an arrangement, an individual's contract with a carrier comes with a subscription to Iovine's (yet to exist) streaming music service - whether you want it or not.

Pay no attention to the fact that, across the media and entertainment business, the world is unbundling, going a la carte, maximizing consumer choice. Promoters create market anxiety, causing distributors to lock down deals their competitors might otherwise get.

Of course, bundled systems and "curated" presentation, are pretty much what the revolution in the music industry has been against. But pay no attention to that.

The music business may have been flattened. But Jimmy Iovine is still standing and trying to take the music business back for the music industry.